INDIANAPOLIS, Nov. 21 /PRNewswire-FirstCall/ -- Standard Management
Corporation ("Standard Management" or the "Company")
(OTC:SMANOTC:SMANP), an Indianapolis-based provider of
pharmaceuticals to long-term care and infusion therapy patients,
today reported a net loss from continuing operations for the three
months ended September 30, 2006 of $0.35 per diluted share, or $5.7
million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010416/STANDARDLOGO )
Continuing Operations: Net revenues Sales for the third quarter of
2006 decreased $0.6 million or 10.6% to $4.9 million compared to
the third quarter of 2005, primarily due to a decline in revenue of
$1.9 million or 77% in our base of business existing prior to the
2005 business acquisitions (due to the loss of a major customer)
offsetting the $1.3 million increase in sales from our third
quarter 2005 business acquisitions. Gross profit Gross profit for
the third quarter of 2006 decreased by $.3 million or 21% to $1.0
million compared to the third quarter of 2005, primarily due to a
$.6 million decrease of gross profit from our base of business
existing prior to the 2005 business acquisitions, primarily at our
Apothecary Solutions operations, partially offset by a $.3 million
increase from our third quarter 2005 business acquisitions.
Depreciation and amortization Depreciation and amortization was $.4
million and $.5 million in the third quarter of 2006 and 2005,
respectively. Goodwill Impairment The Company incurred a $1.0
million goodwill impairment charge in our base of business existing
prior to the 2005 business acquisitions. Other income Other income
for the third quarter of 2006 was $.2 million versus $.4 million
for the third quarter of 2005, both primarily representing dividend
income from a preferred stock investment we had from June 2005 to
June 2006 and rental income related to space in our corporate
headquarters. Interest expense Interest expense for the third
quarter of 2006 increased by $.7 million to $1.7 million compared
to $1.0 million in the third quarter of 2005, primarily due to
financing fees related to short-term senior notes issued and
settled during the third quarter of 2006. Additional interest
expense from new debt issuances during the 2006 quarter were offset
by lower interest expense related to fewer outstanding subordinated
debentures as a result of the Trust Preferred Securities exchange
in June 2006. Discontinued Operations: Net loss from discontinued
operations for the third quarter of 2006 was $5.0 million compared
to net gain of $.2 million for the third quarter of 2005. Included
in the 2006 results is a $.3 million loss related to the settlement
of the purchase price adjustment dispute with Capital Assurance in
regards to our June 2005 sale of Standard Life and $4.7 million of
losses related to Rainier, Holland and PCA, including related
impairment charges. The 2005 balance includes only the operating
results of Rainier, Holland and PCA since their third quarter 2005
acquisition dates. Subsequent Events On October 20, 2006, the
Company completed the sale of certain rights, properties and assets
of Long Term Rx to Omnicare, Inc. pursuant to an Asset Purchase
Agreement (the "LTRX Agreement") with Omnicare. The contract
purchase price was for $4.9 million. Of the purchase price, (1)
$4.2 million in cash was paid by Omnicare at the closing, (2) up to
an additional $750,000 payment may be made within 30 days of the
six month anniversary of the closing, and (3) within 10 days of
Omnicare providing services to a Contingent Payment Facility, as
defined in the LTRX Agreement, and prior to January 1, 2007, a
contingent payment of up to $225,000 may be made based on a
calculation defined in the LTRX Agreement. The $750,000 payment was
held back pending a potential post-closing adjustment to be
measured against a specified historical value of the purchased net
assets. Should the finally determined net assets be less than the
specified amount, the holdback payment will be reduced on a
dollar-for-dollar basis, potentially resulting in a refund. The
Company expects to record a gain on the sale of approximately $1.2
million (prior to the contingent payment of $225,000) after an
expense related to the buy out of a portion of the remaining lease
for space no longer needed at our operating facility in
Indianapolis. The revenues and net income of Long Term Rx for the
nine months ended September 30, 2006 were $6.4 million and $85,000,
respectively. Total assets of Long Term Rx as of September 30, 2006
were $2.9 million including $1.8 million of intangible assets and
goodwill. Earnings For the three months ended September 30, 2006
and 2005, net loss from continuing operations was $5.7 million or
$0.35 per diluted share and a loss of $4.1 million or $0.46 loss
per diluted share, respectively. For discontinued operations our
net loss was $5.0 million or $0.31 per diluted share, and net
income of $.02 million or $0.03 per diluted share, for the three
months ended September 30, 2006 and 2005, respectively. Total loss
for the three months ended September 30, 2006 and 2005 were $10.8
million or $0.66 per diluted share and $3.8 million or $0.43 per
share, respectively. To facilitate comparisons and enhance the
understanding of our operating performance, subsequent to the sale
of our financial services business, the discussion that follows
includes financial measures that are adjusted from the comparable
amounts under Generally Accepted Accounting Principles ("GAAP").
For a detailed presentation of reconciling items please refer to
the following schedules. Three Months Ended Six Months Ended
September 30 September 30 ------------------- ---------------- 2006
2005 2006 2005 ------- ------- ------- -------- Earnings before
interest, income taxes, depreciation and amortization ("EBITDA"):
Operating (loss) $(4,166) $(3,461) $(12,387) $(10,858) Goodwill
impairment 950 - 950 - Other income, net 169 392 7,467 392
Depreciation and amortization 408 451 1,282 1,449 -------- --------
-------- --------- EBITDA $(2,639) $(2,618) $(2,688) $(9,017)
-------- -------- -------- --------- Earnings before interest,
income taxes, depreciation and amortization ("EBITDA") for the
third quarter of 2006, was a loss of $2.6 million or $0.16 per
diluted share, compared to a loss of $2.6 million or $0.29 per
diluted share for the third quarter of 2005. Affecting the third
quarter of 2006 were $.9 million or $0.07 per diluted share of
settlement costs associated with a former officer, $1.1 million or
$0.09 per diluted share related to potential financing and
acquisition costs not capitalized and $2.8 million or $.22 per
diluted share net loss on sale of preferred stock related to the
sale of Standard Life Insurance Company of Indiana. Chairman's
Comments Ronald D. Hunter, Chairman, President and Chief Executive
Officer stated, "After twelve months of strategic application and
relief from legacy impediments, the new healthcare Standard
Management is positioned for the future." Mr. Hunter commented,
"With an acceptable balance sheet and the realignment of corporate
overhead expense, combined with a robust pipeline of future
acquisitions, the financial markets for equity and debt financing
are becoming more receptive to assisting the completion of our
current acquisitions under consideration." This press release
contains "forward-looking statements" within the meaning of section
27 A of the Securities Act of 1933. The use of the words "believe,"
"expect," "anticipate," "intend," "may," "estimate," "could,"
"plans," and other similar expressions, or the negations thereof,
generally identify forward-looking statements. Forward-looking
statements in this press release include, without limitation, the
ability of the Company to address the factors cited by our
independent auditors as a basis for their qualified audit opinion,
the performance and growth of our business, potential future
acquisitions, and their impact on the Company's performance. These
forward- looking statements are subject to known and unknown risks,
uncertainties and other factors, which could cause actual results
to be materially different from those contemplated by the
forward-looking statements. Such factors include, but are not
limited to the ability of our management team to successfully
operate a health services business with limited experience in that
industry; our ability to expand our health services business both
organically and through acquisitions, including our ability to
identify suitable acquisition candidates, acquire them at favorable
prices and successfully integrate them into our business; general
economic conditions and other factors, including prevailing
interest rate levels and stock market performance, which may affect
our ability to obtain the proposed capital and additional capital
when needed and on favorable terms; customer response to new
products, distribution channels and marketing initiatives; and
increasing competition in the sale of our products. We caution you
that, while forward-looking statements reflect our good faith
beliefs, these statements are not guarantees of future performance.
In addition, we disclaim any obligation to publicly update or
revise any forward- looking statement, whether as a result of new
information, future events or otherwise, except as required by law.
Standard Management is a holding company headquartered in
Indianapolis, IN. Information about the Company can be obtained by
calling the Investor Relations Department at 317-574-5221 or via
the Internet at http://www.sman.com/ . STANDARD MANAGEMENT
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(unaudited, dollars in thousands) September 30 December 31 2006
2005 ------------ ----------- ASSETS Current assets: Cash and cash
equivalents $614 $1,876 Accounts receivable, net 2,557 3,549
Inventories 1,594 1,841 Prepaid and other current assets 1,093 782
Assets of discontinued operations - 14,373 ------- ------- Total
current assets 5,858 22,421 Property and equipment, net 9,428
10,141 Assets held for sale 942 1,506 Deferred financing fees, net
1,095 2,009 Officer and other notes receivable, less current
portion 809 842 Investments in unconsolidated subsidiaries 160
5,160 Intangible assets, net 1,281 1,870 Goodwill 3,334 4,050 Other
noncurrent assets 1,337 1,388 ------- ------- Total assets $24,244
$49,387 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $2,984 $1,143 Accrued
expenses 2,482 1,830 Current portion of long-term debt 4,097 2,532
Liabilities of discontinued operations 439 1,068 ------- -------
Total current liabilities 10,002 6,573 Long-term debt, less current
portion 22,551 36,776 Other long-term liabilities 1,886 1,095
------- ------- Total liabilities 34,439 44,444 Shareholders'
equity: Common stock, no par value, warrants and additional paid in
capital, 60,000,000 shares and 40,000,000 shares authorized in 2006
and 2005, respectively, and 18,944,700 and 10,712,859 shares issued
in 2006 and 2005, respectively 70,770 68,537 Retained deficit
(70,245) (55,793) Treasury stock, at cost, 2,840,173 and 1,617,651
shares in 2006 and 2005, respectively (10,828) (7,901) Accumulated
other comprehensive income 108 100 -------- -------- Total
shareholders' equity (10,195) 4,943 -------- -------- Total
liabilities and shareholders' equity $24,244 $49,387 ========
======== STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited dollars in
thousands, except per share amounts) Three Months Ended Nine Months
Ended September 30 September 30 -------------------
------------------ 2006 2005 2006 2005 -------- --------- --------
-------- Net revenues $4,883 $5,461 $17,688 $9,707 Cost of sales
3,845 4,150 13,541 7,590 ------ ------ ------- ------ Gross profit
1,038 1,311 4,147 2,117 Selling, general and administrative
expenses 3,846 4,321 14,302 11,526 Goodwill Impairment 950 - 950 -
Depreciation and amortization 408 451 1,282 1,449 ------- -------
------- ------- Operating loss (4,166) (3,461) (12,387) (10,858)
Other income, net 169 392 7,467 392 Interest expense (1,739)
(1,012) (4,064) (3,322) ------- ------- ------- ------- Net
realized investment loss Other expense, net Income (loss) before
income taxes (5,736) (4,081) (8,984) (13,788) Income tax expense
(benefit) - - - - ------- ------- ------- -------- Net loss from
continuing operations (5,736) (4,081) (8,984) (13,788) Discontinued
operations: Income (loss) from discontinued operations, net of
income tax expense of $0, $50, $0, and $212, respectively (5,049)
239 (5,468) (33,877) --------- -------- --------- --------- Net
loss $(10,785) $(3,842) $(14,452) $(47,665) ========= ========
========= ========= Income (loss) per share: Basic and diluted:
Loss from continuing operations $(0.35) $(0.46) $(0.77) $(1.67)
Income (loss) from discontinued operations $(0.31) $0.03 $(0.47)
$(4.11) ------- ------- ------- ------- Net loss $(0.66) $(0.43)
$(1.24) $(5.78) ======= ======= ======= ======= Weighted average
shares outstanding 16,243,844 8,895,592 11,641,923 8,250,631
========== ========= ========== ========= STANDARD MANAGEMENT
CORPORATION AND SUBSIDIARIES RECONCILIATION STATEMENT AND
DEFINITIONS Non-GAAP Basis (unaudited, dollars in thousands)
Footnotes to Financial Information: Definitions: GAAP: Amounts that
conform with U.S. Generally Accepted Accounting Principles.
Non-GAAP: Amounts that do not conform with U.S. GAAP. Note 1:
Standard Management believes that the readers' understanding of our
performance is enhanced by the Company's disclosure of certain
Non-GAAP financial measures as presented in this document. The
Company's management believes that the adjusted results provide
some additional focus on the ongoing operations of the Company.
Standard Management's method and calculation of these measures may
be different than those used by other companies and, therefore,
they may not be comparable. Note 2: EBITDA shown in these financial
presentations is earnings before interest expense, other income,
income taxes, depreciation and amortization. Standard Management
believes that certain readers find EBITDA to be a method for
measuring a company's ability to service its debt, which is the
primary reason that Standard Management uses this financial
measure. EBITDA does not represent cash flows from operating
activities as defined by GAAP and should not be used as a measure
of liquidity. Standard Management's calculation of EBITDA may be
different from other companies.
http://www.newscom.com/cgi-bin/prnh/20010416/STANDARDLOGO
http://photoarchive.ap.org/ DATASOURCE: Standard Management
Corporation CONTACT: Standard Management Corporation Investor
Relations, +1-317-574-5221 Web site: http://www.sman.com/
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